MACQUARIE INVESTOR DAY ELIKHULU AND THE FUTURE JUNE 2018 - - PowerPoint PPT Presentation

macquarie investor day
SMART_READER_LITE
LIVE PREVIEW

MACQUARIE INVESTOR DAY ELIKHULU AND THE FUTURE JUNE 2018 - - PowerPoint PPT Presentation

MACQUARIE INVESTOR DAY ELIKHULU AND THE FUTURE JUNE 2018 DISCLAIMER The name 'Presenter' refers to Pan African Resources PLC and its advisors, subsidiaries or affiliated companies. This presentation has not been filed, lodged, registered or


slide-1
SLIDE 1

MACQUARIE INVESTOR DAY

ELIKHULU AND THE FUTURE JUNE 2018

slide-2
SLIDE 2

2

DISCLAIMER

The name 'Presenter' refers to Pan African Resources PLC and its advisors, subsidiaries or affiliated companies. This presentation has not been filed, lodged, registered or approved in any jurisdiction and recipients of this document should keep themselves informed of and comply with and observe all applicable legal and regulatory requirements. Statements or assumptions in this presentation as to future matters may prove to be incorrect. The Presenter makes no representation or warranty as to the accuracy of such statements or assumptions. Circumstances may change and the contents of this presentation may become outdated as a result, and the Presenter has no obligation to update the presentation or correct any inaccuracies or omissions in this presentation. Recipients should not treat this presentation as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers. This presentation may not be reproduced in whole or in part, nor may any of its contents be divulged to any third party without the prior consent in writing of the Presenter. The recipient acknowledges that neither it nor the Presenter intends that the Presenter act or be responsible as a fiduciary to the recipient, its management, stockholders, creditors or any other person. Each

  • f the recipient and the Presenter, by accepting and providing this presentation respectively, expressly disclaims any fiduciary relationship and agrees that the recipient is responsible for making its own

independent judgments with respect to any transaction and any other matters regarding this presentation. Furthermore, the information contained in this presentation may also qualify as “inside information” as defined in the Financial Markets Act (Act No. 19 of 2012) (‘FMA’). In terms of the FMA it is a criminal offence for a person who knows that he or she has inside information to –

  • deal directly or indirectly or through an agent for his or her own account, or for the account of another person, in listed securities to which the inside information relates;
  • disclose the inside information to another other than in the proper course of a person’s employment, profession or duties; and
  • encourage or cause another person to deal or discourage or stop another person from dealing in the listed securities to which the inside information relates.

The Presenter makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless the expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects. The Presenter shall not have any liability for any loss suffered due to reliance being placed on this presentation the information contained herein or the oral presentations referred to. Furthermore, the information contained in this presentation may also qualify as “inside information” as defined in the Market Abuse Regulation (“MAR”). It is a breach of MAR where a person possesses inside information and :

  • uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates; or
  • discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties

This presentation is for information purposes only and does not constitute an offer or invitation to subscribe for or purchase any securities, and neither this presentation nor anything contained therein nor the fact of its distribution shall form the basis or be relied on in connection with or act as any inducement to enter into any contract or commitment whatsoever. Some or all of the information contained in these slides and this presentation (and any other information which may be provided) may be inside information relating to the securities of the Presenter within the meaning of the Criminal Justice Act 1993 and the Market Abuse Regulation (EU/596/2014) (“MAR”). Recipients of this information shall not disclose any of this information to another person or use this information or any other information to deal, or to recommend or induce another person to deal in the securities of the Presenter (or attempt to do so). Recipients of this information shall ensure that they comply or any person to whom they disclose any of this information complies with this paragraph and also with MAR. The term “deal” is to be construed in accordance with the Criminal Justice Act 1993 and with MAR. Recipients of these slides and the presentation should not therefore deal in any way in ordinary shares in the capital of the Presenter (“Ordinary Shares”) until the date of a formal announcement by the Presenter in connection with the information contained in this presentation. Dealing in Ordinary Shares in advance of this date may result in civil and/or criminal liability. Neither these slides nor any copy of them may be taken or transmitted into the United States of America or its territories or possessions (“United States”), or distributed, directly or indirectly, in the United States, or to any U.S. Person as defined in Regulation S under the Securities Act 1933 as amended, including U.S. resident corporations, or other entities organised under the laws of the United States or any state of the United States, or non-U.S. branches or agencies of such corporations or entities. Neither these slides nor any copy of them may be taken or transmitted into or distributed in Canada, Australia, Japan, or the Republic of Ireland, or any other jurisdiction which prohibits such taking in, transmission or distribution, except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States or other national securities laws.

slide-3
SLIDE 3

3

FORWARD LOOKING STATEMENTS

Statements in this report that address exploration activities, mining potential and future plans and objectives of Pan African Resources are forward-looking statements and forward-looking information that involve various risks, assumptions and uncertainties and are not statements of fact. The directors and management of Pan African Resources believe that the expectations expressed in such forward-looking statements or forward-looking information are based on reasonable assumptions, expectations, estimates and projections. However, these statements should not be construed as being guarantees or warranties (whether expressed or implied) of future performance. There can be no assurance that such statements will prove to be accurate and actual values, results and future events could differ materially from those anticipated in these statements. Important factors that could cause actual results to differ materially from statements expressed in this report include among others, the actual results of exploration activities; technical analysis; the lack of availability to Pan African Resources of necessary capital on acceptable terms; general economic, business and financial market conditions; political risks; industry trends; competition; changes in government regulations; delays in

  • btaining governmental approvals; interest rate fluctuations; currency fluctuations; changes in business strategy or development plans and other risks.

Although Pan African Resources has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated

  • r intended. Pan African Resources is not obliged to publicly update any forward-looking statements included in this report, or revise any changes in events, conditions or circumstances on which any such

statements are based, occurring after the publication date of this report, other than as required by regulation.

slide-4
SLIDE 4

4

THE AFRICAN FOCUSED GOLD PRODUCER

slide-5
SLIDE 5

5

OVERVIEW OF PRESENTATION

  • Background
  • 2018 predicament and remedial plans
  • Tailings operations and Barberton Mines
  • Future growth prospects

Royal Sheba Egoli

slide-6
SLIDE 6

BACKGROUND

slide-7
SLIDE 7

7

BACKGROUND

  • PAR is dual-listed on the JSE and on AIM
  • All operations are currently in South Africa
  • Market capitalisation ~ ZAR 3.1 billion
  • Group refocused on its core gold operations during the current financial year
  • High cost ounces curtailed - strategic focus on long life, low cost, sustainable production ounces
  • PAR tailings operations are critical to deliver into this strategy
  • Attractive growth potential through Royal Sheba and Egoli

› Updated Royal Sheba feasibility study by end September 2018

slide-8
SLIDE 8

8

BACKGROUND

Group empowerment structure

slide-9
SLIDE 9

OUR PREDICAMENT AND ACTION PLANS – FEBRUARY 2018

slide-10
SLIDE 10

10

OUR PREDICAMENT – FEBRUARY 2018

Group costs as defined by World Gold Council

ZAR/kg FY2014 FY2015 FY2016 FY2017 H1 FY2018 All-in sustaining costs 349,008 402,221 405,847 514,435 545,908 All-in sustaining cost excl. EGM U/G 448,579 Average gold price received 433,437 446,274 542,850 542,773 551,506 100,000 200,000 300,000 400,000 500,000 600,000

Gold price on 27 February 2018 – R495,000/kg

slide-11
SLIDE 11

11

OUR PREDICAMENT – FEBRUARY 2018

Remedial actions

  • Evander initiated Section 189 process in terms of South African Labour Act on 26 February 2018
  • Section 189 process concluded on 27 May 2018
  • Approximate number of employees retrenched – 1,700 employees
  • Retrenchment cost approximately R160 million excluding leave liability
  • Evander 7 and 8 Shafts placed on care and maintenance for Egoli and remnant mining on 8 Shaft
  • Surface sources processing and ETRP remining continuing
  • Also considering very limited mining of high grade underground areas, and possibly mining of Evander 8 Shaft

pillar

  • Have also indicated to government that Pan African would consider any other credible proposal that creates

employment opportunities whilst safeguarding our assets

slide-12
SLIDE 12

TAILINGS OPERATIONS AND BARBERTON MINES

slide-13
SLIDE 13

OUR LONG-LIFE, LOW-COST TAILINGS RETREATMENT OPERATIONS

slide-14
SLIDE 14

14

OUR LONG-LIFE, LOW-COST TAILINGS RETREATMENT OPERATIONS

Gold tailings retreatment operations

  • Barberton

Tailings Retreatment Plant

  • Regrind mill installed to improve throughput and recoveries
  • Initial capital outlay of ZAR325.7 million (~USD37 million) – paid back in 18 months
  • Evander

Tailings Retreatment Plant (T

  • be incorporated into the Elikhulu

Tailings Retreatment Plant)

  • LOM of 14 years
  • Current AISC of USD735/oz
  • Initial capital outlay of ZAR174.3 million (~USD15 million) – paid back in less than 3 years
  • Elikhulu

Tailings Retreatment Plant (Currently in final construction phase)

  • ~56,000oz p/a gold production in first 8 years, LOM of 14 years
  • AISC forecast at below USD700/oz (@R12.50)
  • Forecast capital of ZAR1.74 billion (~USD125 million) – forecasting payback of 4 years post commissioning
slide-15
SLIDE 15

15

PAR INVESTMENT CASE

Disciplined capital allocation decisions

* Recorded ZAR125 million impairment for Phoenix during FY2013 and ZAR101 million during FY2017

Project Investment capital/ purchase price (ZAR million) Forecast payback period Phoenix CTRP 308.9* Disposed of to Sylvania Platinum for R89 million Evander Underground 1,300 Original forecast payback of approximately 4 years – impacted by deep level underground challenges in the SA mining industry and gold price – however purchase included the Elikhulu and Egoli projects BTRP 325.7 Paid back in 18 months ETRP 174.3 Paid back in less than 3 years Uitkomst Colliery 148.0 Disposed of Uitkomst for a profit of R91.3 million Shanduka Gold transaction 546.7 Materially value accretive to shareholders – 17% increase in EPS Elikhulu Tailings Project 175.5 Forecasting capital of R1.74 billion – Forecasting 4 years payback

slide-16
SLIDE 16

16

OUR LONG-LIFE, LOW-COST TAILINGS RETREATMENT OPERATIONS

Gold surface sources production (6 months ending 31 December)

Oz AISC (USD)

100 200 300 400 500 600 700 800 20,000 40,000 60,000 H1 - 2015 H1 - 2016 H1 - 2017 H1 - 2018 Looking ahead Elikhulu

  • 28,000

ETRP

  • 8,980

15,924 11,937 11,937 BTRP 11,710 12,830 14,741 8,452 10,000 AISC 480 443 442 702 20,389oz

* ETRP ounces increased due to additional surface sources processed through the ETRP section to compensate for the repairs to 7 Shaft in October 2016 and the resultant reduced production from underground. ** Forecasted production on current ETRP achievement and assuming surface sources can be secured at the same rate over the life of the ETRP, BTRP producing 20,000oz per annum and forecasted Elikhulu production of 56,000oz per annum.

49,937oz** 11,710oz 21,810oz 30,665oz*

slide-17
SLIDE 17

17

TAILINGS OPERATIONS – BTRP

  • BTRP

› Processing difficulties at the Barberton’s Tailings Retreatment Plant (“BTRP”), due to the re- mining operation moving to the lower-grade Harper dump following depletion of the Bramber dump, and the head grade reducing from 2.2g/t to 1.4g/t › The Harper dump material has a larger coarse fraction, which resulted in clogging of the thickener › A regrind mill has been installed to reduce the Harper dumps course fraction material, which will improve material handling and recoveries Production challenges

slide-18
SLIDE 18

18

TAILINGS OPERATIONS – BTRP

› Installation of a 1.6 MW regrind mill to facilitate treatment of coarse material › Return the Barberton Mines BTRP to 21 Koz per annum › Project cost – approximately R60 million › Commissioned end May 2018 – first gold by June 2018 › Process flowsheet – regrinding of coarse TSF fraction and conveyor sand/coarse fed material Addressing BTRP recoveries

slide-19
SLIDE 19

19

TAILINGS OPERATIONS – BTRP

Schematic and actual view of BTRP regrind mill addition

slide-20
SLIDE 20

20

TAILINGS PRODUCTION GROWTH - ELIKHULU

Location

slide-21
SLIDE 21

21

TAILINGS PRODUCTION GROWTH - ELIKHULU

Completed DFS December 2016 April 2017 Completed successful bookbuild to raise required equity April 2017 Secured debt funding package Approval of water-use license August 2017 Elikhulu sod turning September 2017 Elikhulu forecast construction completion date July 2018

19 Months

Accelerated development programme

slide-22
SLIDE 22

22

TAILINGS PRODUCTION GROWTH - ELIKHULU

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 10 20 30 40 50 60 70 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Gold recovered Grade

Forecasted production profile (calendar years)

Gold recovered (Koz) Grade (g/t)

* 2018 excludes possible improved production due to earlier commissioning of the Elikhulu plant during August 2018 as well as additional ounces to be produced when combining ETRP production into the Elikhulu plant.

slide-23
SLIDE 23

23

TAILINGS PRODUCTION GROWTH - ELIKHULU

› Construction progressing well and currently ahead of schedule and below budgeted cost › First gold anticipated in August 2018 and full commissioning in September 2018 › Current project expenditure is R1.2 billion and forecasting an overall saving on approved capital budget Current status

slide-24
SLIDE 24

BARBERTON MINES

Underground Operations

slide-25
SLIDE 25

25

BARBERTON MINES

Production statistics

Tonnes

2 4 6 8 10 12 30,000 60,000 90,000 120,000 150,000 180,000 H1 - 2014 H1 - 2015 H1 - 2016 H1 - 2017 H1 - 2018 Fairview 53,623 48,488 55,421 52,623 52,232 Sheba 53,559 45,386 47,549 44,359 41,705 Consort 42,407 32,839 36,460 26,186 31,032 Head grade 10.4 11.4 10.6 9.4 8.7

g/t

slide-26
SLIDE 26

26

BARBERTON MINES -SUSTAINING PRODUCTION, TONNAGE AND GRADE

Arresting the historical declining underground mining profile T

  • nnage:

› Increase waste and reef development for ore reserve generation by 61% relative to FY18, to improve mining flexibility › Currently 2 high grade platforms being cycle mined at Fairview mine and development fast-tracked to open up 3rd platform thereby increasing flexibility even further › Improve logistical constraints at Fairview 3 Shaft decline by optimising hoisting of men and material › Fairview sub-vertical shaft as previously announced Grade: › Grade control: 25mx25m in-fill drilling on MRC which will increase block factors to 90% confidence › Implementing new estimation methods for grade forecast (Kriging) › Detail mine scheduling to manage grade and tonnage variables (Planned vs Actual)

slide-27
SLIDE 27

27

BARBERTON MINES PROJECTS – FAIRVIEW SUB-VERTICAL SHAFT

Phase 2

Phase 1 Sheba mine deepest level 100m Planned access development

slide-28
SLIDE 28

FUTURE GROWTH PROSPECTS

slide-29
SLIDE 29

29

FUTURE GROWTH – BARBERTON & EVANDER

Exploration Upside

› Embarked on a strategy to assess the exploration potential at Barberton and Evander Mines › Egoli Project - surface drilling completed and identified prospective geology indicating secondary Channel parallel to Kinross Channel › Royal Sheba - surface drilling for resource definition › Shango Solutions (independent geological consultants) have been mandated to define the following:

  • Short

Term Exploration – Objective: to improve geological confidence in near term reserves › Extending reserves from known orebodies by delineating down-dip and lateral continuity within the MMR, MRC, ZK and other orebodies at Barberton and Kinross Channel at Evander

  • Medium

Term Exploration – Objective: to identify opencast resources and increase Egoli’s geological confidence › Near mine exploration on brownfield targets such as Royal Sheba, Bullion, Clutha, Margret, Victory Hill at Barberton and Egoli extension, No 5 Decline at Evander

  • Long

Term Exploration – Objective: to identify replacement orebodies › Identifying potential targets along the regional structural settings for example the Sheba, Ulundi and Eureka antiforms at Barberton and prospective Channels in the Evander Basin

slide-30
SLIDE 30

30

Royal Sheba: Priority surface geological prospect

Geology Gold mineralisation occurs within the Sheba Fault shear zone in the banded chert-carbonate shale unit of the Fig Tree

  • Group. The Royal Sheba orebody was previously mined and is open-ended at depth.

Exploration Surface drilling program of 14 exploration holes has commenced to define the extension to the mineral resource.

Royal Sheba: Underground mining feasibility study

Mine Design Feasibility Studies › Evaluating advantages of an approximate 600m long, 1m diameter vent shaft on Sheba 23 Level haulage to enable multi-blast conditions › DRA is conducting a Basic Economic Assessment (BEA) which will focus on optimisation options › An update of the Royal Sheba structural, geological and mineral resource models in three dimensions (3D) are being conducted to optimise the mineral resource Up to 35kt of ore from either project can be treated at the BTRP .

FUTURE GROWTH – BARBERTON & EVANDER

slide-31
SLIDE 31

31

FUTURE PROFITABLE GROWTH – ROYAL SHEBA

Project Status The Royal Sheba orebody is being accessed from 23 Level Sheba Mine development of which +/- 900m has been developed and approximately 850m remains

slide-32
SLIDE 32

32

FUTURE GROWTH - EGOLI

  • The Project is adjacent to the No 7 Shaft infrastructure and

extends from the boundary of Taung Gold International Limited’s No 6 Shaft mining right.

  • The Project will use the established No 7 Shaft and metallurgical

facilities, which are approximately 3km from the shaft infrastructure.

  • Historical development at 7 Shaft has made ready access to the
  • rebody possible within a relatively short timeframe coupled

with low execution risk.

  • The Project has more than one-million ounces of contained gold

in measured and indicated categories.

  • Mining feasibility study undertaken by DRA Global into the

viability of the Project. The study’s findings are summarised hereunder:

‐ 10 000 20 000 30 000 40 000 50 000 Jul‐19 Apr‐20 Jan‐21 Oct‐21 Jul‐22 Apr‐23 Jan‐24 Oct‐24 Jul‐25 Apr‐26 Jan‐27 Oct‐27 Jul‐28 Apr‐29 Jan‐30 Oct‐30 Jul‐31 Apr‐32 Jan‐33 Capital Tonnes ORD Tonnes WC Dev Tonnes Ledging Tonnes Stoping Tonnes Tonnes RS

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

2018 - 19 2019 - 20 2020 - 21 2021 - 22 2022 - 23 2023 - 24 2024 - 25 2025 - 26 2026 - 27 2027 - 28 2028 - 29 2029 - 30 2030 - 31 2031 - 32 2032 - 33 2033 - 34

Key Metrics CAPEX (R-million) R 572.0 OPEX (incremental) R 1,250/t IRR (Real, pre-taxation) 46% NPV (R mill) (Real, pre-taxation) @7.5% R 2,303 @10% R 1,742 @12.5% R 1,324

Overview LOM Production Profile (ROM tonnes) Production Profile (Au oz)

slide-33
SLIDE 33

33

FUTURE PROFITABLE GROWTH - EGOLI

Gold accumulation trends for Evander Gold Mines

slide-34
SLIDE 34

34

FUTURE PROFITABLE GROWTH - EGOLI

Resource Category T

  • nnes (Mt)

Gold (Kg) Gold (Koz) Grade (g/t) Block Width (cm) Grade (cmg/t) SG (t/m3) Measured 0.361 3,238 104 8.97 110 986 2.71 Indicated 2.922 28,828 927 9.87 110 1,085 2.71 T

  • tal M&I

3.283 32,066 1,031 9.77 110 1,074 2.71 Inferred 6.124 59,628 1,917 9.74 110 1,071 2.71 Grand T

  • tal

9.406 91,693 2,948 9.75 110 1,072 2.71

Notes: Mineral Resources are reported in accordance with the SAMREC guidelines. Mineral Resources would be the same if they are reported according to the guidelines of JORC. Cut-off values are reported applying a gold price of ZAR600,000/kg (US$1,370/oz and ZAR13.62/US$1). Mineral Resources are reported inclusive of mineral reserves. All mineral resources exclude geological structures, regional pillars, middling pillars, safety pillars and shaft pillars. Mineral Resources are reported as in-situ tonnes. Any discrepancies in totals are due to rounding. The following tonnage discount factors have been applied:

  • Geological loss of 2% for the Measured Category
  • Geological loss of 2% for the Indicated Category
  • Geological loss of 5% for the Inferred Category

Additional effects of mining and recovery losses have been considered in the cut-off grade calculations.

slide-35
SLIDE 35

THANK YOU